How does affiliate marketing work? – Full Guide

Duben 13, 2021
IronFX Affiliate team

As mentioned in a previous article, affiliate marketing is a performance-based method of promoting products. Businesses pay affiliates commission based on conversions of leads. In fact, affiliates get rewarded by promoting and selling other peoples’ or companies’ products. Sales can easily be tracked through affiliate links so as to calculate commissions more easily.

Affiliate marketing involves a few easy steps:

  • Get the affiliate link from the seller
  • Put it on your website, blog or any other medium
  • Make customers click on the link
  • Customers are redirected to the seller’s website
  • Customers buy the product
  • Purchase is tracked through the tracking link
  • Purchase is confirmed and the affiliate gets paid the agreed commission

Who is involved in affiliate marketing?

Affiliate marketing involves three parties:

  1. The merchant

  2. This is the business or individual selling the product. Whether it is a single entrepreneur or a large organisation, there needs to be a product. Sellers do not need to be involved in the marketing procedure, but if they are part of the advertisement, they profit from the revenue sharing.

  3. The affiliate

  4. These are the persons, individuals, or companies, who will advertise the product to their audience to drive traffic. They get paid a commission upon successful sales or leads. Affiliates need to find an appealing way to convince customers to buy the products, so they need to speak to their audience’s interests.

  5. The consumer

  6. Whether consciously or subconsciously, consumers are a key part of affiliate marketing. When they buy the product, both the merchant and the affiliate get paid for it. Irrespective of how the affiliate will get paid though, the consumer will receive the product as in any other normal purchase, unaffected by the affiliate system in which they are actively involved.


How do businesses use affiliate marketing?

Most of the time, affiliate marketing is just one channel of businesses’ marketing campaigns, which allows them to benefit from someone else’s audience. As long as appropriate affiliates are found to promote products and services, the chances of not driving sales through affiliate marketing are limited.

Sometimes affiliates are not only rewarded by the commission, but also by unique offers or discount codes. However, in most cases, affiliates get paid on a commission basis via a pre-determined percentage of each sale. In some other cases, there is also a per-lead basis, in which payment occurs once a lead is generated, regardless of conversion.

How do affiliates promote products?

How to leverage the chosen audience to buy the target product is usually up to the affiliates and is not so important as long as they find a way to sell. The greater the sales, the more money made by both parties.

Some popular tactics to drive traffic used by affiliates involve social media, content marketing, SEO and PPC. However, if the affiliate’s target audience is strong enough, then potential earnings are equally high. The smarter way to go would be to use multiple channels together to increase success and earnings.

Disclaimer: This information is not considered as investment advice or an investment recommendation, but is instead a marketing communication